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Why did Bear Stearns fail?

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โˆ™ 2008-12-23 19:07:18

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Bear Stearns' leverage (the money it borrowed) was so high (30x plus) that a "crisis of confidence" developed. Investors began withdrawing money from Bear and counter parties (their customers) stopped doing business with them - effectively their liquidity dried up. It was a classic Run on the Bank. Financial institutions foundations are based upon confidence and trust, so a healthy institution can become insolvent almost overnight. Due to the "run", Bear Stearns was forced to sell to JP Morgan at a fire sale price.

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โˆ™ 2008-12-23 19:07:18
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Bear Stearns was created in 1923.


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A 29-billion-dollar non-recourse loan was made to J.P. Morgan back with MBS. See Wikipedia "Bear Sterns" for details.


What is the birth name of Jeff Stearns?

Jeff Stearns's birth name is Jeffrey Allen Stearns.


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Taylor Stearns's birth name is Taylor Rae Stearns.


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